Returning Insurance Commissioner To Gubernatorial Appointment Removes People’s Control Over Insurance Rates, Group Says

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Legislator Tries To Overturn Prop 103 Reform, Is Challenged

One week after his legislation to ban insurance industry contributions to California’s elected insurance commissioner failed in the state senate, Senator Quentin Kopp has introduced a bill to repeal Proposition 103‘s requirement that the commissioner be elected. SB 225 (Kopp) would put on the June 1998 ballot an initiative that returns power to appoint the commissioner to the governor.

Consumer groups condemned the bill as an attempt to remove the insurance commissioner’s direct accountability to the people and an opportunity for insurance industry cash to rig another election in insurers’ favor, with permanent results.

In a letter sent to Kopp today, the Proposition 103 Enforcement Project asked Kopp to introduce legislation that places a companion initiative on the June 1998 ballot, an initiative which bans insurance industry contributions to the elected insurance commissioner. The electorate could then choose between an appointed commissioner and an elected commissioner who would not be permitted to accept insurance industry contributions.

“A gubernatorial appointee is never accountable to people, only to the governor’s campaign contributors,” said Proposition 103 author Harvey Rosenfield, executive director of Proposition 103 Enforcement Project. “If Senator Kopp wants the electorate to make a choice, he should give the voters a real choice.”

Rosenfield noted that frustration with Insurance Commissioner Chuck Quackenbush, whose campaign committees have received over six million dollars from the insurance industry he regulates, prompted the bill.

“Senator Kopp’s hasty and misguided response to a frustrating situation will only compound the problem,” said Jamie Court, advocacy director for the Project. “The people will have the final say about Commissioner Quackenbush unless Senator Kopp’s unfortunate lark is successful. “

“Insurance company cash would be attracted to any ballot initiative restoring an appointee to the commissioner’s office like bees are drawn to honey,” Rosenfield noted. “The last appointed insurance commissioner, Roxani Gillespie, is now an insurance industry lawyer. Insurance companies would like nothing better than to own the commissioner’s office again, but the electorate will be loath to relinquish its control over an elected official who sets their insurance premiums, no matter how much insurers spend for an initiative campaign.”

Elected Commissioners Vs. Appointed Commissioners

Proposition 103 created the office of an elected insurance commissioner and charged the commissioner with approving or denying insurers’ premium increase requests. Compared to appointed insurance commissioners, elected commissioners have done more for the consumer:

  • Elected commissioners are accountable directly to the voters and, for this reason, have instituted pro-consumer reforms that appointed commissioners have refused to implement. For instance, even Commissioner Quackenbush, an insurance industry ally, has issued regulations implementing the provision of Proposition 103 that requires auto insurers to primarily base rates on a driver’s safety record rather than the driver’s ZIP-code. Quackenbush adopted the regulations rather than face consumer outrage. California’s last appointed insurance commissioner, Roxani Gillespie, refused to issue such rules because they were unpopular with the insurance industry. Currently, Gillespie represents the insurance industry as a lawyer.
  • Appointed Commissioner Roxani Gillespie, a former insurance company executive, exempted 402 auto insurance companies from Proposition 103 rate rollbacks. The elected commissioner who followed Gillespie, Commissioner John Garamendi, forced companies to comply with Prop 103‘s rate rollback requirements. The Los Angeles Times declared of Gillespie’s actions at the time,” It looks as though the official charged with enforcing Prop 103 is bending over backward to benefit the insurance industry, but won’t do the same for consumers.” (“Whose Side Is Gillespie On?” Los Angeles Times, August 24, 1989)
  • Under California’s last appointed commissioner, Roxani Gillespie, auto insurance rates rose 11% annually. Under elected insurance commissioners, California’s auto insurance rates declined slightly overall between 1989 and 1995 while auto rates in the rest of the nation increased 32.2%.
  • Just prior to leaving office, appointed Commissioner Gillespie granted 46 auto insurance companies rate increases. Elected Commissioner John Garamendi subsequently froze insurance premiums once taking office. Garamendi’s rate freeze was in place the majority of his tenure.

“Restoring an appointed insurance commissioner is a recipe for auto insurance premium hikes,” Rosenfield said. “Even a pro-industry commissioner like Quackenbush has been forced to institute some pro-consumer reforms because he faces the electorate’s scrutiny.”


Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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